Despite reporting a drop in operating and finance costs in the full year ended December 31 2020, Conoil Plc, one of the most formidable names in Nigeria’s downstream petroleum industry recorded a profit decline by 27 percent, the company’s 2020 audited financial results released Monday have shown.
Although the company’s finance cost fell 36.71 percent in the review period, its profit before tax reduced by 24.3 percent to N2.15 billion from N2.83 billion the preceding year. Similarly, profit after tax fell to N1.44 billion in 2020 from N1.97 billion the previous year.
The company which is engaged in the marketing of refined petroleum products and also in the manufacturing and marketing of high-quality lubricants and chemicals for domestic and industrial use recorded an 18.02 percent decline in its income tax expense.
A breakdown of the company’s financial result showed that its revenue reduced by 15.91 percent to N117.47 billion from N139.76 billion in the same period of the corresponding year.
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The slow growth at the top line level could be attributed to a slight drop in sales of the company’s lubricants and specialized segment products that have been offering crucial support for industrial growth.
However, the cost of sales reduced by 15.08 percent to N107.65 billion in the review period from N126.32 billion the preceding year.
It should be noted that firms operating in the downstream oil and gas sector usually have high-cost margins and low-profit margins because of their inability to control the cost of production and fixing selling price; selling price is usually fixed by the government who pay oil marketers money for the importation of refined crude. Conoil’s gross profits were down by 26.87 percent to N9.82 billion from N13.44 billion the preceding year, a signal of the company’s inability to control direct costs attributable to projects.
The company’s distribution and administrative expenses in the review period were reduced by 25.03 percent to N7.25 billion as against N9.67 billion the preceding year.
Conoil’s total assets were down by 23.15 percent to N48.86 billion as against N63.58 billion the preceding year.
